Original title: how long will it take for global crude oil demand to return to pre-epidemic levels?
Demand for crude oil is surging, but it has not fully recovered.
On the one hand, there is still an epidemic blockade around the world, which means that people are still spending less on dining out and services, and on the contrary, spending more money on home life.
On the other hand, physical consumption is still booming, boosting demand for naphtha for plastics and diesel oil, which is consumed by trains and trains carrying these goods, and at the same time, it has also contributed to a jump in consumption of liquefied petroleum gas (LPG), which is the main fuel for life in parts of Asia.
However, the demand for aviation fuel is still very low because people are rarely flying. Although many people avoided public transport during the outbreak, demand for gasoline is far from returning to normal.
These developments have an impact on the oil industry as a whole. Countries rich in naphtha and liquefied petroleum gas have stronger pricing power. This is one reason why oil from oil fields in the North Sea and US shale areas can be at a higher premium than in the Middle East, traders say.
Naphtha producers have been the biggest winners in recent months. According to the International Energy Agency (IEA), crude oil demand surged 11% to 660000 barrels per day in June compared with June 2019 levels. Demand for liquefied petroleum gas (LPG) rose 7.2% to 880000 barrels per day, higher than the pre-epidemic level.
By contrast, demand for aviation fuel and gasoline remains weak, totaling 396000 barrels a day last month, down from June 2019. Demand for overseas petroleum products is 270000 barrels a day lower than in the same period two years ago.
Refineries with petrochemical production capacity can make a lot of money from this change in consumer behavior and promote the prosperity and development of the chemical industry. Other refineries, particularly in Europe, have been forced to stop operations because demand is weak enough to resume work.
The International Energy Agency estimates that oil demand in June will be about 3% lower than in the same period in 2019, which is not affected by the epidemic. It also predicts that oil demand will return to roughly the same level by December.